Greater China Sales and Production Commentary- December 2022

Greater China sales

November 2022: -11.5%; 2.11 million units vs. 2.38
million units

YTD 2022: +2.7%; 22.32 million units vs. 21.74 million
units

• In November 2022, 2.11 million light vehicles were sold in
  Greater China, marking an 11.5% decrease compared with the same
  month of 2021. Specifically, light vehicle sales in mainland China
  decreased 11.8% from 2.34 million units in November 2021 to 2.06
  million units. Passenger vehicles recorded sales of 1.83 million
  units, a 9.0% decrease year on year (y/y), and light commercial
  vehicle (LCV) sales contracted 28.9% y/y to 0.23 million
  units.

• On a year-to-date (YTD) basis, light vehicle sales in mainland
  China increased 2.8% from 21.31 million units to 21.91 million
  units. Precisely, passenger vehicle sales increased 7.6% y/y to
  19.32 million units, while LCV sales decreased 22.9% y/y to 2.6
  million units. Segment-wise, YTD sedan sales increased 11.1% y/y
  from 8.84 million units to 9.83 million units, and the sport
  utility vehicle (SUV) segment increased 4.7% y/y from 8.43 million
  units to 8.82 million units. YTD sales of multipurpose vehicles
  (MPVs) decreased 1.5% y/y to 0.68 million units.

• Chinese auto sales in November were severely hindered by
  COVID-19 restrictions in China. The prolonged pandemic has slowed
  the country’s economic growth, with its GDP forecast to grow 2.8%
  in full-year 2022, much lower than the target set at the beginning
  of the year of 5.5%. Starting from the beginning of December, a
  raft of cities has begun to ease COVID-19 pandemic-related
  restrictions, after the central government urged local authorities
  to optimize pandemic-containment measures, including lifting
  lockdowns, reducing the frequency of mass testing, and allowing
  home quarantine for close contacts. The relaxing of containment
  policies has set the stage for a broader economic recovery from
  COVID-19 disruptions, although it will take time for consumer
  confidence to climb.

• In November, sales of internal combustion engine (ICE) vehicles
  in the broader passenger vehicle market contracted by 30% y/y, with
  consumers turning to new-energy vehicles (NEVs). The strong growth
  in NEV demand is helped by government incentives, including
  subsidies and purchase tax exemption. Passenger vehicle sales in
  December may be helped by incentives provided by automakers in an
  attempt to clear inventories and boost year-end sales. The end of
  central government electric vehicle (EV) subsidies by the end of
  2022 will also help to convince customers to make their purchases
  within the year. In the fourth quarter, vehicle sales will be
  constrained by the resurgence of COVID-19 infections in the
  country. Automakers are trying to counter downward pressures in the
  domestic market with a renewed push for exports. In the year to
  date, NEV exports doubled y/y to nearly 600,000 units, and
  new-vehicle exports increased 55% y/y to 2.785 million units. In
  addition, the NEV purchase tax exemption will be extended into
  2023, while cities such as Shanghai will likely withdraw some of
  their preferential policies on plug-in hybrid electric vehicles
  (PHEVs) from 2023 to shift their focus to battery-electric vehicles
  (BEVs). We expect NEV penetration to edge close to 26% in 2022,
  supported by strong products.

• With strong year-end stimulations and marked easing of COVID-19
  related restrictions, light vehicles sales should grow by 3.6% to
  24.76 million units in 2022, of which passenger vehicles are
  estimated to increase 7.7% y/y to 21.75 million units, while LCVs
  are forecast to decline 18.8% to 3.01 million units.

Greater China production

November 2022: -15.3%; 2.16 million units vs. 2.55
million units

YTD 2022: +8.6%; 23.85 million units vs. 21.97 million
units

• Greater China’s light vehicle production in November recorded
  2.16 million units for a decline of 15.3% year on year (y/y). In
  mainland China, light vehicle production decreased 15.5% y/y to
  2.13 million units. The spread of COVID-19 in major industry cities
  led to light vehicle production losing momentum in mainland China
  in November after October’s golden purchasing season. Changan was
  hit in the first wave as all manufacturing facilities in Chongqing
  were shut down for 10 days in November. FAW-VW’s plant in Chengdu
  was also shut down temporarily at the end of November owing to
  local COVID-19 cases. Even production lines in Changchun plants
  were closed owing to supply shortages. These supply chain
  interruptions led to Honda’s plants in Wuhan shutting down for one
  week and will even affect global output from Japan.

• The light vehicle production forecast for Greater China for
  full-year 2022 is set at 26.33 million units, marking a 6% y/y
  increase. In mainland China, light vehicle production will be 26.08
  million units for a 6.1% y/y increase. Heavily damaged by the
  November lockdown and potential supply interruption in December, we
  lowered the 2022 mainland China light vehicle production by 350,000
  units compared with the November forecast, leading to 6.1% y/y
  growth in the December forecast (1.5% lower than the November
  forecast).

• The latest vehicle inventory alert (VIA) index, issued by the
  China Automobile Dealers Association (CADA), stood at
  65.3%—with an increase of 6.3% month on month (m/m) and 9.9%
  higher than in the same period of 2021—above the threshold. In
  November, the epidemic continued to expand, and the auto market
  sales performance fell short of expectations. Auto shows and
  marketing activities around the country could not be carried out
  smoothly owing to restrictions to help control the pandemic, and
  the auto market was relatively quiet. The release of pent-up
  consumer demand for cars was hindered by the closures of many
  dealers.

• In November, production of passenger vehicles in Greater China
  decreased 10.9% y/y to 1.94 million units. Market segment-wise, car
  production stood at 0.9 million units with a 13.2% y/y decrease.
  Production of multipurpose vehicles (MPVs) increased 12.2% y/y to
  70,219 units. Production of sport utility vehicles (SUVs) decreased
  9.9% y/y to 0.97 million units. Plant closures due to COVID-19
  cases led to Changan suffering a 45% production loss of 400,000
  units in November. FAW-VW could build only 110,000 units, falling
  30% in November. On the contrary, motivated by an expiring subsidy,
  the new-energy vehicle (NEV) market maintained momentum in
  November. Tesla achieved sales of over 100,000 units, contributed
  by domestic demand for the Model Y and exportation of the Model 3.
  Thanks to a reliable in-house supply chain, BYD continued to
  dominate the passenger car market with industry output of over 2
  million units—127% y/y growth in November. The Dynasty series
  contributed a major share as the Han and Song plus surged up by
  145% and 125% y/y, respectively.

• In November, light commercial vehicle production in Greater
  China posted 0.22 million units, falling 41.6% y/y. Market
  segment-wise, production of chassis-cabs stood at 0.11 million
  units, down 47.5% y/y. Production of vans stood at 78,565 units
  with a 32.2% y/y decrease. Pickups decreased 38.9% y/y to 28,203
  units. Full-year production should reach 2.96 million units for a
  23.9% y/y decrease.

This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.